Diseases of both the airways are amongst the leading causes of mortality and morbidity worldwide. They are often characterized by abnormalities of the lung epithelium including epithelial hyperplasia, mucous metaplasia, epithelial dysplasia and the failure of epithelial regeneration after injury. Mouse models do not reflect many of the most important features of human lung disease. In addition, the lack of human lung tissue is one of the key bottlenecks preventing an analysis of the cellular and molecular mechanisms that result in human lung disease. These problems require new approaches to generate lung epithelial cells in vitro in numbers suitable for disease modeling, drug screening and transplantation. ES cells have attracted significant interest in research and medical communities due to their unique capacity for unlimited proliferation in culture and their ability to give rise to all differentiate cell types. The discovery of induced-pluripotent stem cells (iPS cells) now opens up the possibility of generating large numbers of differentiated human lung cells derived from iPS cells which are turn are created from skin fibroblasts from patients with a variety of specific lung disorders. Thi new technology creates an opportunity to model human disease mechanisms in vitro and to develop patient-specific therapies. However, attempts to efficiently produce large numbers of homogenous, differentiated lung epithelial cells in vitro have met with limited success. In this application we outline a proposal to optimize the in vitro generation of lung progenitors from human Cystic Fibrosis iPS cells. In contrast to previous reports, we will focus on the generation of early lung epithelial progenitors expressing the transcription factor Nkx2.1. Nkx2.1 is the earliest and the most specific marker of pulmonary epithelial progenitors and is also expressed in the majority of mature lung epithelial cells. To efficiently generate Nkx2.1-positive early lung progenitors we propose to use a combination of rational development-based differentiation strategies that recapitulates the stepwise differentiation of lung progenitor cells during normal embryogenesis and high throughput unbiased differentiation screens using chemical and biological libraries. In the future, a similar strategy can be used to produce any specific lung epithelial population from patients with any respiratory disorder, but as proof of principle we stat with one of the most common genetic disorders of the lung, Cystic Fibrosis.